Farnborough Airshow: The Scorpion in search of a customer

Textron Scorpion

Two US fighter jets were due to make their international debuts this week at the year's most important aerospace event, the Farnborough Airshow. At the moment, only one of them is here.

The F-35 Lightning II may be the world's most expensive, most advanced military jet programme, but it was a cheap and cheerful budget aircraft that managed the trans-Atlantic crossing to Farnborough.

The Scorpion costs about $20m (£12m) a throw, is built from off-the-shelf components, and went from drawing board to first flight in 23 months.

The F-35 Lightning, conceived in the early 1990s and costing about $157m, is still in the US while engineers figure out what caused a fire that has grounded the entire fleet.

OK, making comparisons is unfair; the Scorpion and F-35 are lightyears apart in specification and functionality. But it is still slightly ironic.

Scopion flies over Isle of Wight The Scorpion flies over the Isle of Wight during its first appearance outside the US

Whit Peters, part of the company behind the Scorpion, was involved in the F-35 when he was Secretary of the US Air Force in the 1990s.

A few years ago, he and some colleagues had an idea for a new, light tactical fighter for general security and reconnaissance, positioned between existing cheaper, but ageing aircraft, and full-on strike fighters.

"We were pretty sure that there was a gap in the market," Mr Peters says. "It was about building something with enough tactical capacity to satisfy customers, but that also had low running costs. We are in an era when defence departments are facing budget cuts."

No customers

His company, AirLand, pitched the concept to manufacturers, but it was Textron, the US giant behind Cessna corporate jets and Bell Helicopters, that grabbed the opportunity.

In 2012, Textron AirLand Enterprises was born. "It started with a team of about 10, a whiteboard and a clean sheet," Mr Peters says.

The Scorpion jet went from drawing board to first flight in 23 months - but has yet to find a buyer

Start Quote

When you take on a new challenge there are always sceptics”

End Quote Bill Anderson President, Textron AirLand

What makes the aircraft so ambitious is that it was conceived and built without a launch customer. Indeed, there is still no customer, which is why the Farnborough debut in front of military delegations from all over the world is so important.

Normally, projects on this scale would secure government money and a design deal at an early stage. Not this one.

Bill Anderson, Textron AirLand's president, will not reveal how much the company has invested. But analysts estimate the cost would be at least $100m to get just one show-plane ready.

"Was it very risky? Yes. Was it a smart risk? Yes," says Mr Anderson. "But the marketplace is very interested. We produce commercial products all the time. That was the approach here."

A lot of the technology inside the Scorpion comes from Textron's top-of-the-range Cessna Citation corporate jet. Some companies approached to get involved jumped at the chance. Others shied away.

Physics student Katie Ley from Farnborough sits in a mock-up of the Lockheed Martin F-35 Lightning II cockpit at the Farnborough Airshow Not the real thing: Lockheed Martin's F-35 did not make the start of Farnborough, so visitors have had to make do with a mock-up
'Some got it, some didn't'

"When you take on a new challenge there are always sceptics," says Mr Anderson. "Some of the companies that turned us down did so because [the Scorpion] was not in their comfort zone."

Start Quote

The question is: will the customer want something off-the-shelf, or will they want something specific?”

End Quote Damien Lasou Accenture

The Textron pitch to sub-contractors was to view the aircraft as a commercial project with military potential. "Some got it, some didn't. Those that didn't are starting to show interest now," he says.

The use of off-the-shelf components keeps the cost down, but does that mean the aircraft is low-tech?

"I would not use the phrase low-tech," Mr Anderson says. "I prefer to call it mature technology. There's nothing low-tech about a Martin Baker ejection seat or a weapons system."

The two-seat, twin-engine Scorpion, made of advanced composites used in civil aircraft, will carry infrared air-to-air missiles and wing-mounted gun pods.

Border control, reconnaissance, maintaining no-fly zones: these are the main functions. Indeed, that is the role of most fighter aircraft missions these days.

Mr Anderson says the Scorpion's big selling point is its low operating costs - $3,000 an hour.

Global market

The US is currently using its F-16 super-jet on low-end missions in Afghanistan. "There's no air-to-air threat there," says Mr Anderson.

A pilot waves from the cockpit of a US F-16 fighter jet at Bagram air base, Afghanistan (2009) The F-16 Fighting Falcon in use in Afghanistan

"They are spending $18,000 an hour running the F-16. You're burning the life of the aircraft on missions it was not designed for."

He puts the global market for Scorpions at about 2,000. Countries in Africa, South America, and the Middle East are likely targets for sales. But what Textron would really like is the stamp of approval from the Pentagon.

There have been talks with US defence officials, Mr Peters says, but he isn't giving anything away. "We are working with more than one very credible country, so the outlook is good. I think that the US Defense Department has recognised that there is a need for something like this."

The Pentagon, along with defence departments around the world, have made no secret that the days when defence contractors would be spoon-fed dollars to produce long-delayed and over-budget equipment are over.

Mr Peters says the Scorpion fits squarely into this new environment.

line break
RAF Red Arrows display team

Farnborough Airshow: In pictures

line break
Financial flyer?

Analysts and experts are watching closely.

Dennis Muilenburg, chief operating officer at Boeing, calls the Scorpion "an intriguing study".

He told the BBC: "Capability at a low cost: that is the consistent theme across the defence and civil sectors these days." Given this environment Textron's "underlying idea makes sense".

Damien Lasou, managing director of the global aerospace and defence division at consultancy Accenture, agrees Textron is showing a different approach to defence procurement.

"Most defence programmes are complicated and delayed. Textron is offering something that is standard and fit for purpose," he says.

"The question is: will the customer want something off-the-shelf, or will they want something specific?"

The fact that Textron is gambling its own money, rather than the taxpayers', must have concentrated minds on the Scorpion's market potential.

But until the aircraft wins some orders, no-one will know if this particular project is a financial flyer.

More on This Story

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

BBC Business Live

  1.  
    LABOUR CONFERENCE 11:28:
    Gas

    The second day of the Labour conference is underway. Ed Balls is speaking later. The shadow chancellor is expected to say that a Labour government would stop paying the controversial winter fuel allowance to the richest 5% of pensioners. You can have a look at the full conference agenda here.

     
  2.  
    COOL BRANDS 11:20:
    People wait to buy the new Apple iPhone 6 and 6 Plus

    Apple has been voted "the coolest brand in Britain" for the third year in a row, the Guardian reports. The CoolBrands list saw Apple beat Aston Martin and Nike, which came second and third respectively. But Twitter has fallen out of the top 20, along with the BBC's very own iPlayer. Ho hum we'll get 'em next time.

     
  3.  
    DEBT 11:14:
    FCA

    Debt management firms "must raise their game" says the Financial Conduct Authority (FCA). In a release this morning the regulator says many of the firms, which target people who have "often reached rock bottom", are failing to follow the new rules brought in in April to protect customers.

     
  4.  
    UNDER EMPLOYED? 10:43: Via Twitter

    Has deputy leader of the House of Commons, Tom Brake been on holiday? His tweeting of last week's unemployment figures today seems oddly timed: "The latest unemployment figures from the ONS have been released showing a fall by 146,000, lowering total unemployment count to 2.02 million". Keep up.

     
  5.  
    AIR FRANCE 10:30:
    Passengers wait at check-in counters during Air France one-week strike

    The head of Air France-KLM, Alexandre de Juniac, has given an interview to French newspaper Le Monde saying that he was prepared to suspend until December the rollout of the Transavia low-cost operation that sparked strike action by pilots. The strike has led to severe disruption in the past week. Air France flights have been reduced to 40% of normal service.

     
  6.  
    AIR FRANCE 10:13: Breaking News

    French national airline, Air France-KLM, has announced it is putting a halt to its low-cost airline expansion plans in an attempt to end the strike by pilots that entered its second week today

     
  7.  
    TESCO PROFITS 10:10:

    Barclays Capital analyst James Anstead says although there are few details at present as to why Tesco's profits need to be restated "there is a clear implication that Tesco's previous full year trading profit guidance of £2.4bn to £2.5bn needs to be reduced. He adds: "We cannot necessarily assume that the maximum change required is £250m."

     
  8.  
    ENTREPRENEURIAL SPIRIT 09:57:

    An 18-year-old "whizzkid" with a love for the board game Monopoly is preparing an audacious bid to lead one of UK's largest retailers, according to the Daily Mail. Harris Aslam already sits on the board of Nisa Retail. He has apparently has told the group's chairman he intends to stand for election as its next chief executive.

     
  9.  
    TESCO PROFITS 09:46:

    Marks and Spencer's chief financial officer (CFO) Alan Stewart was announced as the new CFO of Tesco in July but he is still on gardening leave and is not due to join Tesco until December. Laurie McIlwee resigned as CFO in April but continued in post until just over a week ago. Over the last week there has been no CFO in the Tesco head office, the company has confirmed.

     
  10.  
    TESCO PROFITS 09:39:

    Tesco says it has informed the financial regulator, the Financial Conduct Authority (FCA), about its investigation into the reporting of its profits.

     
  11.  
    TESCO PROFITS Via Twitter Adam Parsons Business Correspondent

    tweets: "Tesco won't confirm my revelation that Chris Bush has stepped aside. But will confirm that Robin Terrell is now doing his job!"

     
  12.  
    TESCO PROFITS 09:31:

    Tesco chairman Richard Broadbent says the retailer's investigation is focusing on the reporting of payments made to Tesco from its suppliers. It seems to be an issue of the timing of payments, rather than a "hole" in the accounts.

     
  13.  
    TESCO PROFITS 09:18:

    Dave Lewis, Tesco chief executive, will not confirm that Chris Bush the managing director is one of the four executives suspended as part of its investigation into its profits reporting. He is speaking to journalists on a conference call.

     
  14.  
    MARKET UPDATE 09:16:

    Aside from Tesco the FTSE 100 index is lower by 0.66% at 6,792 just over an hour into the trading day. Tesco is perhaps unsurprisingly the biggest faller. Meanwhile, engineering firm Petrofac is the biggest riser, up 1.72% to 1066p.

     
  15.  
    TESCO SHARES 09:11:

    Tesco's share price is beginning to stabilise a little. Having fallen 11.3% on the open to 203.5p, Tesco shares are currently trading 7.99% lower at 211.25p

     
  16.  
    TESCO PROFITS 09:01: BBC Radio 4

    James Bevan, chief investment officer at CCLA Investment Management, tells Today the profit warning from Tesco could amount to falsifying accounts. "They have decided to account for profits arising in future periods in the current period, and deferred costs that otherwise should have been recognised. That's really serious."

     
  17.  
    TESCO PROFITS 08:57: Via Email

    Richard Hunter, head of equities at Hargreaves Lansdown, says Tesco's profit warning "does not come close to jeopardising overall profitability" at the supermarket, and the market will be happy that at least the bad news is out in the open and being dealt with.

     
  18.  
    UK ECONOMY 08:44: BBC Breakfast
    Jeremy Cook

    Breakfast's Steph McGovern is down in London in the financial district talking to Jeremy Cook, chief economist at World First foreign exchange, who says we should be focusing on how strong the UK economy is following the Scottish referendum. Unemployment is down, GDP is growing - "all very very good news".

     
  19.  
    TESCO PROFITS Via Twitter

    Sean Farrell on the Guardian's City Desk tweets: "Tesco CEO Lewis: 'This is not in the ordinary course of events. This has been audited by a big reputable firm.'

     
  20.  
    HEADLINES
  21.  
    TESCO PROFITS 08:35: Radio 5 live

    Four senior Tesco executives including the UK managing director Chris Bush have been suspended, while an investigation into profits reporting is carried out, Adam Parsons says on Radio 5 live. The share price has recovered a bit but is still down more than 9%.

     
  22.  
    MINIMUM WAGE 08:21: Radio 5 live

    Shane Brennan from the Association of Convenience Stores says the minimum wage is becoming a "political football" between the main political parties, and warns a rise could hit employees negatively. "When the minimum wage goes up, small retailers cut back on the hours they offer staff," he tells Radio 5 live.

     
  23.  
    CHILD BENEFIT 08:18: Radio 5 live

    Ed Balls is talking about the minimum wage on 5 live Breakfast, but he keeps falling off the air. He was half way through explaining how the Labour party wants to extend the child benefit cap - one of those "difficult decisions" necessary to "balance the books".

     
  24.  
    TESCO SHARES 08:14:

    Tesco's shares opened down 11.3% at 203.5p - that's its lowest price since May 2003 - more than a decade ago.

     
  25.  
    TESCO SHARES 08:09: Breaking News

    Tesco's share price falls by more than 10% in the first few minutes of trading in London.

     
  26.  
    MOSS BROS PROFITS 08:04:

    Menswear retailer Moss Bros has reported a pre-tax profit of £1.95m for the six months to July. That's slightly lower than their previous guidance and reflects the number of stores that were closed for refit in the first half of this year, the company said. Like for like sales were 6.4% higher.

     
  27.  
    TESCO PROFITS Via Twitter Robert Peston Economics editor

    tweets: "Tesco! Oh my giddy aunt. Never thought it would come to this http://www.investegate.co.uk/tesco-plc--tsco-/rns/trading-update/201409220700142186S/ …

     
  28.  
    ALIBABA 07:55:
    Alibaba

    The Financial Times reports that Alibaba, the Chinese ecommerce group, has boosted the value of its IPO to $25bn (£15bn) by selling extra shares. That makes it the biggest IPO in history. Huge investor demand saw the company's share price surge 38% on its debut on the New York Stock Exchange on Friday.

     
  29.  
    TESCO PROFITS Via Twitter

    Richard Hunter from stockbrokers Hargreaves Lansdown tweets: "Profit warning on a profit warning for #Tesco likely to put further pressure on a share price already down 39% over the last year"

     
  30.  
    STOCK MARKET FLOAT 07:47:

    Other news from the stock market this morning: British bank Aldermore says it will float on the London Stock Exchange in October, aiming to raise £75m. Aldermore focuses on lending to small and medium-sized businesses and homeowners.

     
  31.  
    TESCO PROFITS Via Twitter Adam Parsons Business Correspondent

    tweets: "Dave Lewis initiated inquiry over weekend. Am told Philip Clarke has officially left Tesco, but remains available to talk to investigation."

     
  32.  
    PHONES 4U RESCUE 07:36:
    The Phones 4U shop sign.

    Phone network EE is to buy 58 Phones 4U stores - safeguarding 359 jobs - in a deal with administrator PricewaterhouseCoopers. The phone network was known to have entered negotiations over the weekend. On Friday Vodafone agreed to take over 140 Phones 4U shops.

     
  33.  
    TESCO PROFITS Via Twitter Adam Parsons Business Correspondent

    tweets: "Tesco were due to report Interims next week. That has now been cancelled."

     
  34.  
    LABOUR CONFERENCE 07:26: BBC Radio 4

    Labour shadow business secretary Chuka Umanna tells Today Labour is pro-business, but says: "What we have been clear about is we can't go back to business as usual and the kind of fast buck culture we saw in some parts of the economy that helped contribute to the 2008/09 crash."

     
  35.  
    TESCO PROFITS Via Twitter

    City grandee David Buik tweets: "It never rains but it pours dear old Tesco. It appears profits have been over-stated by £250 mn - shares could be down 5% at the opening."

     
  36.  
    TESCO PROFITS 07:15:
    A group of Tesco shopping trolleys

    "We have uncovered a serious issue and have responded accordingly," said Dave Lewis, who took over as the boss of Tesco last month. "The chairman and I have acted quickly to establish a comprehensive independent investigation. The board, my colleagues, our customers and I expect Tesco to operate with integrity and transparency and we will take decisive action as the results of the investigation become clear."

     
  37.  
    TESCO PROFITS 07:11: Breaking News

    Tesco has released a statement saying it over-stated its expected profit for the six months to 23 August. In a trading statement on 29 August it said it expected half-year profits to be £1.1bn. It has now revised this down by £250m.

     
  38.  
    LISTEN AGAIN Via Twitter Adam Parsons Business Correspondent

    tweets: The #WUTM podcast. All yours: bbc.co.uk/podcasts/serie…

     
  39.  
    AIR FRANCE 07:03:
    Air France planes

    Pilots at Air France are looking ahead to a second week on strike this morning. France's transport minister Alain Vidalies says the fate of Air France is at stake in the dispute. Pilots are angry that the airline is expanding its budget carrier, which pays pilots less.

     
  40.  
    LABOUR ANTI-BUSINESS? 06:55: BBC Radio 4

    Lord Jones tells Today that Labour has not given business the credit it deserves. "Without the wealth that business creates you have no public sector, you have no taxation, you don't have one job in the country. That's how important business is," he says.

     
  41.  
    LABOUR ANTI-BUSINESS? 06:51: BBC Radio 4
    Digby Jones

    Lord Digby Jones, former head of the CBI and member of the last Labour government tells Today that Labour is casting doubt on its support for the UK business community. "Whatever the current shadow cabinet say - let's nationalise the banks, let's have a social market in energy, lets increase business taxes, whatever it may be - they are showing by their actions that they actually don't get it," he says.

     
  42.  
    DEVOLUTION 06:42: Radio 5 live

    Wake Up to Money has been discussing the prospects for more devolution across the UK in the wake of the "No" vote in Scotland. Tony Travers from the London School of Economics says the UK is one of the most centralised democracies in the world - 95% of tax revenues go straight to the exchequer.

     
  43.  
    MINIMUM WAGE 06:35: BBC Radio 4

    Is Labour leader Ed Miliband's pledge to raise the minimum wage to £8 per hour by 2020 anti-business?Simon Walker, head of the Institute of Directors, tells the Today programme he shares many of the Labour party's concerns - on energy prices, zero-hours contracts and wages. "But... we don't agree with Labour's instinct to legislate or regulate on these matters," he says.

     
  44.  
    MARKETS 06:29: BBC Breakfast
    Breakfast

    Breakfast's Steph McGovern is in the City in London before dawn this morning, talking to analysts and market traders about what's moving the markets after the "No" vote in Scotland last week. She'll be talking to a currency trader later to find out what's going to happen to the pound.

     
  45.  
    MINIMUM WAGE 06:18:

    Labour's leader Ed Miliband says Labour will put the minimum wage up to £8 an hour if they win the election next year - up from the £6.50 is due to rise to this October. The unions say that's not enough, and want £10 an hour, while the CBI warns any rise will "put jobs at risk".

     
  46.  
    LABOUR CONFERENCE 06:12:
    Labour shadow  chancellor Ed Balls

    Ed Balls is expected to say that Labour will reinstate the 50 top rate of tax in his speech to the party conference later today. That's not necessarily news. But Labour haven't been completely clear on whether they would reinstate the 50p tax band until now. The inclusion of the proposal essentially amounts to an election promise eight months out from the general election.

     
  47.  
    Phones 4U 06:02: Radio 5 live

    EE has confirmed it's looking into buy a few of those Phones 4 U shops now on the market. Judy Palmer from Begbies Traynor defends EE and Vodafone, the operators accused of helping to put the mobile retailer out of business, on Wake Up to Money calling their actions "commercial hardball".

     
  48.  
    06:01: Edwin Lane Business reporter, BBC News

    Hello all. We're also getting the latest on the fate of Phones 4U, after it went into administration last week. Get in touch with us on bizlivepage@bbc.co.uk or tweet us @BBCBusiness.

     
  49.  
    0600: Matthew West Business Reporter

    Morning folks. We start the day with news that luxury shoe brand Jimmy Choo is looking at a stock market float in London, there are also half year results from Moss Bros. The Labour party conference goes into its second full day with a speech from shadow chancellor Ed Balls. It's his last conference speech before the election so we'll bring you any nuggets from that too. Stay with us.

     

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.